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Judging Stimulus: Jobless Rate High, Growth Real

By Brett J. Blackledge and Jim Kuhnhenn, Associated Press WritersDid the stimulus work or not? A year after Congress passed President Barack Obama's huge economic revival plan, the results are mixed -- and hardly final.

WASHINGTON (AP) -- Did the stimulus work or not? A year after Congress passed President Barack Obama's huge economic revival plan, the results are mixed -- and hardly final.

Despite Obama's bold promises, unemployment remains stubbornly high. But job losses have slowed dramatically.

And the nation's recent economic growth is real, even though the government has spent just one-third of the massive stimulus plan. The program -- originally estimated at $787 billion but now priced at $862 billion -- is to continue pumping federal money into the economy into 2011.

One year into the program:

-- Many states and local governments owe their fiscal survival to the stimulus. But those governments are scrambling to find ways to fill the holes in the coming year.

-- Thousands of road and bridge projects broke ground with stimulus money, helping to keep the anemic construction industry afloat. But job losses still were significant, with as many as one in four construction workers unemployed.

Obama used Wednesday's one-year anniversary to offer his own assessment and, predictably, rated the effort an unprecedented success.

"There has never been a program of this scale, moved at this speed, that has been enacted as effectively and as transparently as the recovery act," the president declared.

But the legacy of the American Recovery and Reinvestment Act is yet to be sealed.

In the next 12 months there will be a second wave of government spending, perhaps topping $300 billion. By this time next year, the country could have a better idea whether the program was a costly, debt-increasing blip that made ripples in the nation's economy, or a lifesaving jolt that shielded the country from a financial abyss.

Obama argued on Wednesday that the history already had been written. "One year later, it is largely thanks to the recovery act that a second depression is no longer a possibility," he said.

How are others to judge the recovery program?

When Obama launched it last year, he cast the program as bigger and better than just an ordinary jobs bill. The program, he said, would provide lasting public works projects, improve education, save ailing state and local governments, offer relief to millions devastated by losing their jobs and homes and help provide much-needed health care.

Despite the broad range of those promises -- and evidence shows that at least some of them have been kept -- Obama's stimulus will forever be judged by jobs. By the time the stimulus program kicked in last April, the recession had cost the economy more than 6 million jobs. Since the program began, the nation has lost 2 million more.

Job creation became the administration's mantra. And the White House said the program would be held accountable with an unprecedented public report of every job linked to the stimulus.

Indeed, the jobs were documented one by one on a new government Web site, and the administration proudly pointed to more than 640,000 linked to the stimulus in the early months. It was the best evidence to prove that the stimulus was well on its way to fulfilling Obama's promise of 3.5 million jobs saved or created by the program.

But those counts were seriously flawed, including greatly exaggerated job claims, positions included that had nothing to do with the stimulus, and spending that had nothing to do with saving or creating jobs. It was a blow to Obama's efforts to prove the stimulus truly performed as promised, and it ended with the White House deciding to count jobs the old fashioned way -- by estimating.

When Obama signed the stimulus law, the nation's unemployment rate was 7.7 percent. His administration had promised the program would stop the jobless rate from passing 8 percent. But weeks after the stimulus became law, that threshold was broken.

Since that time, Republicans repeatedly asked "where are the jobs?" as monthly unemployment rates rose to as high as 10 percent before dipping to 9.7 percent last month.

Some of those Republicans critical of the stimulus also have taken credit for projects in their districts paid for by the program. "They can't really have it both ways," White House communications director Dan Pfeiffer said Wednesday.

The job losses have slowed over the past year, from a startling 779,000 in January 2009 to about 20,000 last month. Obama's advisers are predicting actual job growth in the next few months.

Perhaps the best news for Obama has been the overall economic growth in recent months, a sure indication of recovery. The gross domestic product, the broad mixture of the nation's economic activity, sank at an annual rate of 6.4 percent at the beginning of last year but has rebounded to gain at a rate of 5.4 percent in the most recent quarter.

Economists generally agree the infusion of federal money contributed to that impressive growth, although many credit a combination of other recovery programs including bank rescue efforts by Treasury and the Federal Reserve.

There are more concrete examples of success when considering the other promises Obama made when signing the stimulus law -- better health care, better schools, better infrastructure.

The stimulus provided more Medicaid health benefits, unemployment checks, food stamps, tax cuts and other relief to millions crippled by a tough economy. In fact, the expanded benefits led congressional budget analysts to increase the overall cost of the stimulus by $75 billion.

The program also allowed states and local school systems to hold onto hundreds of thousands of teachers and other school workers who might have been let go but for the extra federal money. The single greatest count of jobs saved under the stimulus goes to school employees whose jobs were threatened by deep deficits in local and state budgets.

Obama's promise of a better infrastructure remains at least partially unfulfilled. Last year, he said stimulus spending would pay for "remaking the American landscape" with new highways, bridges and transit that "will bring real and lasting change for generations to come."

But much of the transportation stimulus money spent last year went to paving existing roads and repairing bridges that were not among those in the worst shape. State transportation officials described them as necessary projects, but the initiative doesn't live up to Obama's claim that his infrastructure spending compared to President Dwight D. Eisenhower's mammoth Interstate building program of the 1950s.